I am a CPA in Texas with an MBA from the University of Chicago. I have seen a lot and made many mistakes. Hopefully by now I will have learned something from them. Just as importantly, you may learn something from my mistakes. You can e-mail me by clicking on my "View my complete profile".

Wednesday, December 16, 2009

Uncle Sam Protects You

"How do you turn an industry that costs $700 million annually into one that eats $6 billion? Nationalize it, as Congress did airport screening after Sept. 11, 2001. ... Federal and local governments long controlled most aspects of aviation safety, from municipalities that policed the airports they owned to the Federal Aviation Administration's air-traffic control system. When political protestors began hijacking planes in the 1960s, Uncle Sam elbowed his way into security too. Airlines didn't hire experts to invent checkpoints; the Feds imposed them. ... The Aviation and Transportation Security Act of 2001 brought that control of security into the open. ... Foisting the TSA on us protected politicians of both parties far more than it did passengers. 'After 9/11,' said the former chairman of the Homeland Security Committee, Christopher Cox (R-Calif.), 'we had to show how committed we were by spending hugely greater amounts of money than ever before, as rapidly as possible.' ... What they haven't done after eight years and $48 billion is catch a single terrorist. ... One tourist claimed the sex toy that screeners fished from his luggage was a bomb rather than explain it in front of his family, while Democratic Representative John Lewis (D-Ga.) and the late Senator Ted Kennedy (D-Mass.) so menaced America that the TSA added their names to its No-Fly List. This lunacy ruins lives: The embarrassed tourist and other Americans without criminal records or motives have gone to jail. ... The TSA's response? Assistant Secretary David Stone huffed that since the attacks on Sept. 11 cost Americans over $100 billion and took thousands of lives, every dollar the agency spends 'in an era of threatened terrorism' is worth it. Taxpayers might disagree. ... More expensive and more infuriating are the gee-whiz contraptions that don't work: Puffer machines at $160,000 a pop were supposed to detect residues of explosives by blowing air at passengers and dislodging particles for analysis. ... Unfortunately [CTX machines are] 'chemically blind,' as the manufacturer of a rival technology out it: They can't differentiate peanut butter, fruitcake and other foods from explosives of similar density. So many false alarms resulted that screeners resorted to asking passengers what they had packed. Apparently, an agency that believes Listerine and Crest turn explosive at 30,000 feet also believes terrorists answer questions honestly. ... But screeners typically fail to find 60%, 75% and even 90% of the weapons undercover investigators smuggle past them. ... Before Sept. 11, there was no TSA. Can we really credit the agency with stopping any terrorists in the past eight years. Whether weighed against history, common sense, or economics, the conclusion reamins the same: The TSA is another terrorist victory. It's time we sent this boondoggle of a bureaucracy packing", my emphasis, Becky Akers at Barron's, 14 September 2009, link: http://online.barrons.com/article/SB125270793866604679.html.

Chris Cox, we know him. He's late of the SEC. Could we apply these thoughts to the SEC, PCAOB and Sarbox? Screeners miss at last 60% of weapons people try to smuggle on planes. What percentage of frauds does the SEC miss?